Bitcoin Options Market Shows Strong Preference for $100K Calls, Not Fazed by Price Weakness

Crypto options traders are displaying a strategic shift in their betting behavior that deviates from the current downward trajectory of bitcoin’s (BTC) price.

Over the last 24 hours, the primary cryptocurrency by market value has experienced a decline of over 1% to $64,500, extending its retreat from recent peaks near $72,000, as per data from CoinDesk.

Despite this, the activity in bitcoin options available on the prominent exchange Deribit indicates a preference for call options at levels (strikes) significantly above the cryptocurrency’s prevailing market value. This trend might suggest that sophisticated investors anticipate the ongoing price weakness to pave the way for a more substantial upward surge.

In a recent market update, Singapore-based QCP Capital highlighted, “In the options market, we observed an abnormally large buying flow of Dec and Mar [expiry] $90-$100K calls in the last 24 hours. We believe this suggests the market is calling the bottom and positioning itself for a sustained rally, possibly lasting into 2025.”

A call option grants the buyer the right, though not the obligation, to purchase the underlying asset, BTC, at a predetermined price at a later date. Therefore, a call buyer is inherently optimistic about the market’s direction.

The most active bitcoin options on Deribit in the past 24 hours have been concentrated in June expiry calls at $65,000, $68,000, and $70,000, July expiry call at $110,000, and December expiry call at $95,000, as illustrated in the chart.

The discrepancy between the sentiment in the options market and bitcoin’s price is particularly noticeable in the call-put skew. This skew indicates traders’ willingness to pay for an asymmetric payout in either the upward or downward direction.

According to Amberdata, the one-, two-, three-, and six-month skews have consistently remained positive amidst the recent BTC price decline, signaling a preference for calls or upside potential. Only the seven-day skew has turned negative, indicating a demand for protection against downside risks.

In recent weeks, bitcoin has detached from Nasdaq’s upward trend, primarily due to long-term holders and miners selling coins, along with increasing discussions about the non-directional nature of ETF inflows. Notably, the German government transferred BTC valued at $425 million to some cryptocurrency on Thursday, likely with the intention of selling.

This strategic shift in the options market suggests a divergence from the prevailing price trend of bitcoin, hinting at a potential bullish sentiment among sophisticated investors.